1. In accordance with requirements presented in reftel A, Embassy
Brasilia submits the following proposal for 2007 IPR enforcement
training. The proposal is for a grant of $43,900 to provide a
two-day high-level workshop for law enforcement officials (Federal
Police, Customs, Highway Patrol) and judicial authorities (local and
state prosecutors and judges) in the state of Pernambuco, a key
locale in Mission Brazil's efforts to fight IPR piracy. The
workshop is modeled on the five training programs, held in the
States of Minas Gerais, Bahia, Parana, Rio Grande do Sul, and Mato
Grosso do Sul, funded under the same IPR program. The workshop will
focus on expanding law enforcement's knowledge of existing laws
against piracy and protection of intellectual property rights so
that civil and criminal cases against intellectual property rights
abusers hold up in court (see para 19). By reviewing what laws
exist, what is enforceable, what has been done to combat piracy and
protect intellectual property rights, working relationships between
those in the field and those prosecuting are strengthened. Mission
Brazil proposes to use leading Brazilian experts and NGOs such as
the Motion Picture Association's enforcement affiliate in Brazil -
the Association for the Defense of Intellectual Property (ADEPI),
the American Chamber of Commerce, the National Association for
Guaranteeing Intellectual Rights (ANGARDI), and the Northeast
Association for Intellectual Property (ANEPI) - to provide key
expertise in organizing and conducting the workshop. Use of the
very qualified Brazilian experts resident in these organizations
will allow us to better adapt the training program to Brazilian
sensitivities, while saving money on the international air-fare
necessary to bring outside experts from the U.S.

2. Identify Priority Countries/Regions that Threaten Intellectual
Property Rights: Brazil continues to be a high priority country for
USG efforts in improving IPR enforcement. The Northeast of Brazil
has seen a surge in recent piracy activity that has resulted in high
profile enforcement actions. This has been especially pronounced in
Pernambuco.

3. Economic Impact: The enormity of the effects of piracy in Brazil
is hard to exaggerate. Brazil's illegal market in just 3 types of
products (clothes, tennis shoes, and toys) resulted in tax revenue
losses of at least 18.6 billion reais (roughly USD 8.86 billion).
This figure is equivalent to 45% of the annual deficit in Brazil's
bankrupt social security system. A February 2007 International
Intellectual Property Alliance (IIPA) report noted that losses due
to copyright piracy of business software rose almost 30% in 2006;
entertainment software industry losses increased 24 % over the same
period. A national survey showed a 45% increase countrywide in the
monetary amount of illegitimate toys, clothing and sports footwear
traded in Brazil and that counterfeit CDs are the most produced and
purchased items in the contraband market.

4. In 2006, the American Chamber of Commerce and ANGARDI conducted a
poll in Recife, Sao Paulo, Rio de Janeiro and Belo Horizonte to
determine consumers' buying habits and what they thought about the
economic effects of buying pirated goods. The results for Recife
(the capital of Pernambuco) were startling and point out the
importance of fighting piracy in the Northeast. While the report
showed a decline in sale of pirated goods in Sao Paulo, Brazil's
major metropolitan area, it disturbingly pointed out that Recife
consumers buy more pirated goods and are less likely to understand
the social and economic impacts of piracy than consumers in the
other cities. The 2006 commercial value of 13 categories of pirated
goods in Recife (ranging from toys to pocketbooks/wallets to
batteries) amounted to USD 83.9 million according to the report. If
pirated goods are sold at half the price of legitimate goods, this
amount reflects a loss of USD 167.7 million in the formal economy,
and a loss in tax revenue of USD 66.7 million.

5. Crime and Security: While the Triborder region (Brazil, Paraguay
and Argentina) continues to be a major route for pirated goods, law
enforcement officials and NGOs have noted the increasing involvement
of the Northeast in the movement of pirated goods due to stepped-up
GOB customs enforcement efforts in the Triborder region. Citing one
example, the town of Caruaru (about an hour's drive from Recife) is
the well-know wholesale market center and source of most pirated
products in the Northeast. Experts describe an almost wild west
atmosphere in Caruaru with perceived threats to anti-piracy
activists (reftel E).

6. Relevance to Other U.S. Objectives: Intellectual property

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protection is a key U.S. government objective and is one of the
primary goals in our Mission Strategic Plan (MSP). IPR violations
cost U.S. (and local) industry, reduce the incentives to invest in
research and development, and contribute to a culture of
lawlessness. Piracy, in particular, has connections to illicit
trade in general, and its illegally-gained revenues are esily
laundered into other illegal activities. U.. industry has been
engaged in a long struggle t enter the highly-protected markets of
Latin Ameica, and piracy strikes at the gradual gains made over
time in this regard.

7. Political Will: Both the executive branch and the legislative
branch have indicated a political will to continue the fight against
piracy. In 2004, the GOB established the National Anti-Piracy
Council (CNCP), a public-private endeavor overseen by the Ministry
of Justice to coordinate national IPR protection efforts. Since
then, the GOB has evidenced more effective anti-piracy enforcement
efforts. For example, the value of seizures by local and federal
authorities of counterfeit and contraband goods in the first nine
months of 2006 increased 54% over the same period in 2005.

8. Capacity to Achieve Measurable Progress: As a result of
encouragement and actions taken by the CNCP, Brazil's law
enforcement agencies are creating specialized IP units to better
focus and coordinate their enforcement activities and to help
develop essential expertise. The CNCP plans to develop an
operational database to help coordinate law enforcement actions. It
also is considering methods for measuring/gauing progress in
enforcement efforts. Progress onenforcement will also be
measurable by the annua enforcement statistics released by the GOB
Natinal Anti-Piracy Council (CNCP) and through statistcs on
estimated intellectual piracy loses compiled by industry
organizations such as IIPA.

II. Components of an Effective IPR Regime

9. Legal framework: This proposal is being made with consideration
of instituting a more comprehensive framework for conducting
bilateral technical cooperation on IPR enforcement, which the USG is
trying to develop with the GoB. Brazil has many elements of what
could be an effective IPR regime, but in most cases, the
capabilities of these elements need to be enhanced and better
coordinated to provide effective enforcement.

10. Enforcement capacity: Brazil's laws covering copyright issues
are considered adequate; the principal problems are enforcement and
criminal prosecution. Brazilian law enforcement agencies operate as
professional units with substantial capabilities. Brazil's customs
service is heavily engaged in combating piracy and is upgrading its
intelligence gathering and analysis, infrastructure and personnel
capabilities. However, in all these units, many individuals have
not been adequately trained in the specialized area of IP crimes,
particularly in geographic areas with less concentrated piracy
activity. A lack of effective, institutional coordination between
Brazilian law enforcement agencies has also further complicated and
undermined attempts to mobilize Brazilian law enforcement to combat
piracy in a comprehensive manner.

11. Border controls: Brazil's customs service has the ability to
block and intercept pirated products, and is seeking greater
latitude in handling seized goods. Due to the sheer volume,
however, Brazil's 16,886 km land border has been an area of
particular weakness in the country's copyright and trademark
enforcement. Once the border is penetrated, movement of pirated
goods throughout Brazil is hard to deter. There is evidence that as
the border with Paraguay is better enforced, pirated goods are now
crossing the remote western and northern areas bordering Colombia,
Venezuela, and Guyana as well as arriving by sea to the Northwest
(reftel C).

12. Government-Industry Cooperation: Cooperation between the
government enforcement agencies and the private sector has improved
substantially in the last two years through their collective efforts
within the CNCP and creation of a national anti-piracy plan.

13. Effective International Cooperation: Brazil is a signatory to
WIPO and GOB officials have participated in IPR enforcement
seminars, including a recent seminar in Asuncion. Representatives
of various GOB states and other entities are slated to attend an IPR
enforcement seminar in Lima in July. Additionally, the executive
secretary of the CNCP attended a USPTO sponsored IPR enforcement

SIPDIS
program in Alexander, Virginia this June. In November, 2006, USPTO
detailed a patent attorney to Sao Paulo to serve as IPR Attache. He
works closely with the Brazilian patent agency, INPI.

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14. Public Awareness: The GOB and various companies have sponsored
public awareness campaigns. The CNCP - with support of the Union of
Customs Employees and the National Confederation of Industry -
launched a major anti-piracy campaign in 2006 to raise public
consciousness about piracy and contraband in Brazil and emphasize
the importance of intellectual property protection. This program
was aimed at the 16 - 24 year old age group, found by a 2005 U.S.
Chamber sponsored survey to be the largest group of consumers of
pirated goods. Campaign organizers carry their message to schools
and universities and sponsor anti-piracy messages in both print and
broadcast media. They also distribute fliers, t-shirts, buttons,
bumper stickers, caps, and textbooks bearing their distinctive
anti-piracy logo.

15. The "Creativity in Combating Piracy," award is part of this
campaign and is sponsored by a Brazilian consultancy in connection
with the U.S. Chamber of Commerce, NIKE, the Motion Picture
Association and a Brazilian state owned bank. It targets university
students and is intended to promote leadership, social
responsibility and awareness of the causes and impacts of piracy.

16. Senior-level Engagement by Public Officials: GOB IPR
enforcement typically involves two ministries: the Finance Ministry
(Customs and Tax Authority) and the Ministry of Justice (Federal
Police and Federal Highway Patrol). Through the CNCP (which is
overseen by the Vice Minister of Justice), the Ministry of Justice
coordinates interagency IPR enforcement activities and state level
authorities, who often have primary jurisdiction. In turn, the
Division of Intellectual Property at the Ministry of Foreign Affairs
(MFA) is involved in these efforts and liaises with international
actors. Several Brazilian states - notably Rio de Janeiro, Sao
Paulo, Rio Grande do Sul and, most recently, Bahia - have formed
state level anti-piracy groups.

III. Project criteria and metrics

17. Targeted U.S. priorities: Brazil accounts for the largest
estimated trade losses due to piracy in the hemisphere - over $927
million according to a recently updated IIPA report, yet arrest and
incarceration figures remain difficult to obtain and appear dismally
low in relation to the scope of the piracy problem. This project
directly targets the main problem areas in Brazil of law enforcement
and criminal prosecution.

18. Strong support of host government: The Brazilian government has
committed to combating piracy in a systematic and sustainable manner
through establishment of the public-private National Anti-Piracy
Council (CNCP), adoption of a 99 point national action plan, and
annual reports on anti-piracy activities. The GOB has been prompted
by a need to combat piracy because of the harm it causes Brazil
through increased criminality, lost tax revenues, increased
unemployment in the formal economy, economic damage to Brazilian
artists, and the country's international image. The creation of a
working intellectual property rights division at the Ministry of
External Relations is also indicative of the GOB interest in
controlling the problem.

19. Addresses key gap in, or is a fundamental part of, a strategy to
improve IPR enforcement in a country/region: The underlying concept
of the workshop is to bring together law enforcement and judicial
officials, along with NGOs engaged in anti-piracy efforts, in order
to improve the lines of communication between those on the ground
fighting piracy and those tasked with prosecuting. Of primary
importance for any effective anti-piracy effort within the Brazilian
social and institutional context is the creation of networks that
allow for permanent, voluntary and routine communication. In
particular, the increased piracy activity and chronic corruption
among some officials coupled with a perceived lack of attention to
piracy activities in the state have made training and the creation
of an anti-piracy network in Pernambuco a critically high priority
(reftel C). This project would help close that gap.

20. Has the capacity to achieve near term, measurable success, with
clear metrics: We would expect to see the establishment of formal
or informal working groups or teams, comprised of the all the
relevant law enforcement and perhaps judicial officials in
Pernambuco, shortly after completion of the training program. As a
next phase, we would monitor the success of these teams, looking for
increases in actions taken, such as number of raids, seizures,
arrests, and convictions; in instances where data may not have
historically been gathered, a baseline would have to be determined.

21. Has strong project oversight, accountability measures, and
interagency support: The Department of Homeland Security within
Embassy Brasilia will participate in the program and assess its

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strengths and weaknesses on an on-going basis. DHS works
extensively with the GOB on piracy related issues and has the
capability to assess both the program elements and the quality of
GOB participation. In addition to DHS backing, Mission has worked
closely with the regional USPTO IPR Attache who also supports this
proposal.

22. Course Outline

Purpose: To train professionals from a variety of public law
enforcement and judicial organs in Pernambuco to detect, prevent,
and punish intellectual property violations.

General Goals:
(1) to create the critical mass necessary to strengthen the capacity
of the Brazilian government to enforce intellectual property laws;
(2) to train and motivate public officials to identify which
intellectual property laws can be applied within their jurisdiction
and capacity; and
(3) to facilitate informational exchange among various enforcement
organs so that they can coordinate anti-piracy efforts at the
national level, mirroring the highly-effective organizational
structure of those groups practicing piracy.

Specific Goals:
Participants of the workshop will:
(1) understand the organization and modus operandi of the criminal
groups practicing piracy;
(2) be familiar with the pertinent legislation;
(3) know how to identify illegal reproductions; and
(4) understand the importance of constantly updating their operating
methods to keep up with the advances in technology applied by
pirates.

Module 1: Piracy: An overview
Students will be trained to understand the basic principles of the
penal and procedural code, as well as specific IP laws, they apply
to piracy.

Module 2: Analysis of Existing IP Legislation
Students will learn which elements of existing legislation can be
applied to which modes of piracy.

Module 3: Technology
Students will become familiar with the technology used in
disseminating legally-protected works and how they can be
protected.

Participants:
Class size: 35
Location: Courses will be held in the State of Pernambuco.
Participants will be selected from throughout Pernambuco, from
Offices of the Public Prosecutor, the Federal Highway Police, the
Military Police, the Civil Police, Scientific Police; Federal Tax
Authority. Consideration is given to their potential as training
multipliers within their organizations.

Co-Participating Institutions: To provide the broadest possible
perspective, ADEPI conducts the course in cooperation with other
entities dedicated to protecting intellectual property, including
ABC (Brazilian Cinematographic Association), UBV (Brazilian Video
Union),APDIF (Association for the Protection of Phonographic
Intellectual Property), and BSA (Business Software Alliance). These
organizations recommend and/or provide instructors in their specific
areas; provide the latest information on technology and
best-practice enforcement methods, and arrange site visits. The
conference site is to be provided by government authorities, as has
been customary with ADEPI programs. Each training session will
incorporate USG participation by including instructors from DHS and
other relevant law enforcement offices from within the U.S. Mission
in Brazil and/or from Washington.